Corporate governance in India's best companies has always matched up with the best in the West. The good news is that emerging, family-run companies are also picking up best practices in governance.

This transformation is driven by self-interest; since promoters realise that a reputation for good governance not only boosts a company's valuation but also attracts better partnerships and talent. "The board is the custodian of the company's image, brand, reputation," said Subodh Bhargava, chairman, Tata Communications, "It's no longer just about increasing the family's wealth.

Companies today know they have to weather threats to their survival." Lalita Gupte, chairperson, ICICI Venture Funds Management Company, pointed out that improvements are being driven by joint venture partners and private-equity firms, who are providing international perspective and asking more questions.

"Independent directors need to challenge the management. They need to devote time beyond board meetings.

Well governed companies should have least three offsite meetings a year." Charles Tilley, CEO, Chartered Institute of Management Accountants, agreed that the old two-hour board meeting mind-set has to change because a Board meet is no longer about passing financial statements.

"There was a time when book value accounted for 80% of market capitalization — today, it's only 20%.

Brands, people, relationships now account for 80% of a company's value and they need to be discussed and reported." In the West, boards have recently been spending a disproportionate amount of time discussing executive compensation.

In India, the topic that takes up the most time is related party transactions, always a thorny issue with 'groups', where the promoters run a number of companies, both listed and unlisted. Mr Bhargava said that if the company management tries to push through a decision that goes against minority shareholders, independent directors should insist on recording their dissent. "In such cases, the management usually backs off," he said.

Boards are only as good as the people on them and the panelists agreed that there is a lacunae in the process by which companies recruit independent directors.

"Indian companies don't conduct an extensive search," said Kalpana Morparia, CEO, JP Morgan India. The practice is to select from a list of people the promoters are familiar with. This shuts out many good people, especially women."

Alongside statutory Boards, there's a trend of corporates creating advisory Boards, consisting of eminent people whose role is to act as a think tank and provide guidance to the company management. "They already play a big role and we are going to see more of them in the future," said Amit Sharma, president (Asia), American Tower Company.

The concept is not for everybody though. Arun Nanda, director, Mahindra & Mahindra, said he doesn't see the Mahindras ever creating parallel advisory Boards, though he does see the logic, especially for MNCs, unlisted and delisted companies.

"It's a new concept," he said. "Those who do not want the risk and the nitty-gritty associated with statutory boards might join advisory Boards, where the obligations are less and renumeration is higher."

Statutory boards are generally expected to provide sage counsel to the management, but when they don't, advisory boards are an alternative. "Managers need a sounding board," said Sanjeev Aga, former managing director of Idea Cellular. "As a CEO, I would look for new perspective and if there's an absence of that kind of input from the statutory board, shareholders may like to institutionalize it by creating an advisory board."

In an ideal world, the statutory board should act as an advisory board said Deepak Satwalekar, former managing director of HDFC Standard Life, but that doesn't always happen, since board members are not truly engaged. Mr Sharma predicted that only the top 50 companies will be able to get directors of stature, the rest might have to resort to creating advisory boards.

Mr Satwalekar declared that given a chance, he would happily quit all statutory boards that he is on and join advisory boards, which prompted moderator Anjali Bansal, managing director of Spencer Stuart India to ask what would happen to statutory boards in that case.

Kuldip Kaura, managing director & CEO of ACC provided a different perspective, saying that advisory boards might have a special role to play when it comes to triple bottom line responsibility.